A home is one of the biggest investments that most people make
during their lives. Being able to pay for your home will most often
dictate a need for a mortgage to pay for the home over a period of
time. There may come a time when you want to refinance your home
loan, however, and knowing when you may need to do this is
important. What are some of the cases where you would want or need
to refinance your home?
Changing From An Adjustable Rate Mortgage (ARM) to Fixed Rate
If your ARM loan has an interest rate that is higher than what is
being offered for a fixed rate mortgage, you may want to refinance.
This is most dependent upon how long you are going to stay in your
home. If you only plan to stay for a couple more years, you can
stick with your ARM loan in most cases, but if you plan to stay
long-term, you will want to look into a fixed rate mortgage.
Lowering Your Monthly Payment
A drop in mortgage interest rates can make a significant impact
upon your mortgage payment. By looking into home refinance, you may
be able to decrease your mortgage payment. There are three
conditions where you can lower your monthly payment through home
refinance options, including getting a lower interest rate, changing
the term of your mortgage, and getting an interest only mortgage
loan where you pay only pay the interest for a specific amount of
Need Extra Cash
If you have built up equity in your home, you can undergo the
home refinance process and borrow against the value of your home to
get cash for home improvements and other needs. This can be a very
viable option, especially if you have a need for additional cash and
have equity in your home.
Consolidating Credit Card Debt
If you have quite a bit of credit card debt or have a high
interest rate on your credit card debt, you can consolidate the debt
in with your mortgage loan if you have equity on your home. If your
home's value is more than the loan balance, you can take the equity
and pay off your credit cards. This is considered much "healthier"
debt and the interest can be taken off of your income taxes.
Changing From A Fixed Rate Mortgage to an Adjustable Rate
If you are not planning on being in your home for a long time,
you may want to consider changing to a lower Adjustable Rate
Mortgage Loan. This can save you a significant amount of money in
payments to give you more money for other things in your life. This
is a viable option if you are not going to stay in the home for more
than a few years, because you will not have to worry about the
interest rate increasing.
Deciding on a home refinance option will take some time and
thought. To be sure that you make the best decision for you and your
family, you will want to make sure that you carefully consider the
ramifications of this decision. With careful thought and planning,
you can refinance your home to make your financial situation
stronger and more secure.
Please visit our website Refinancing Right for more unbiased and helpful articles on refinancing
your home loan. We pride ourselves on providing up to date,
well researched home loan information.
Don't wait until you are in front of a
mortgage broker for your education as they often have their
own agenda. Refinancing can get complicated. Make sure you
have the required knowledge before making decisions. Have a
look at our refinancing calculator and our guide to online
refinancing on our